Brendan Howlin met with Joan Burton before announcing his decision not to go up against her for the leadership of the Labour Party, the Irish Independent has learned.

Although the exact content of the early afternoon conversation is not known, there were suggestions last night of a deal that Mr Howlin will remain as Public Expenditure Minister if Ms Burton wins the leadership.

"They absolutely agree on the need for continuity and stability in the management of the economy during this period of change," a source said.

The meeting took place on the ministerial corridor connecting Government Buildings and Leinster House.

Mr Howlin's announcement he will not be running leaves Ms Burton as the only contender with experience of serving in Cabinet.

The contest is now expected to be a battle between Ms Burton, the Minister for Social Protection, and Junior Health Minister Alex White.

But another source played down the significance of the meeting saying: "Brendan and Joan have discussed the issue every day. He has talked to umpteen people, including Joan and Alex, as part of the whole sounding out process."

Mr Howlin announced his decision not to run at a meeting of the parliamentary party last evening.

Afterwards, the minister said the party held its "most emotive meeting in 30 years" last night.

The Public Expenditure Minister said Labour must now "circle the wagons" and focus on winning back the votes it lost.

At a highly charged meeting which lasted three hours, a number of deputies shed tears over the devastating defeat at the polls and the subsequent departure of leader Eamon Gilmore.

The Tanaiste told TDs and senators that he decided to step down on Sunday night having agonised over whether to "stay and fight".

He said he was hurt by the actions of members of the so-called 'Gang of Eight' who plotted to oust him as leader.

Mr Gilmore, who became emotional at the meeting, said he was particularly upset at the failure of the group of seven TDs and one senator to contact him. This was seen as a direct criticism of Alex White who defected from Gilmore and expressed his support for the coup.

Minister Joan Burton announces her candidature for leadership of the Labour Party to the media at Leinster House yesterday. Photo: Tom BurkeBrendan Howlin

Mr White told the meeting that it was his intention to confront Mr Gilmore over his dissatisfaction with his leadership. The junior health minister said he would have "left it up to Eamon" as to whether he should step down.

While some TDs felt Mr White was somewhat redeemed following the meeting, others insisted he had "dirtied his bib". The Dublin South TD is expected to announce his candidacy today.

Speaking after the meeting, Mr Howlin told the Irish Independent that his consideration not to stand followed conversations with a number of "likely leaders".

He said it would be up to the new leader to decide whether he remained in Cabinet and he had not ruled out publicly supporting a candidate.

Earlier, Ms Burton ruled out the prospect of Labour pulling out of Government but warned that the limits of austerity imposed on the Irish people had now been reached.

The Social Protection Minister accepted that families were feeling a great deal of hurt as she publicly declared as a candidate for the leadership position of the party.

Ms Burton admitted that the recovery process has been "much slower" than she and her Labour colleagues would have expected but she insisted that she has no intention of pulling out of government if she succeeds Eamon Gilmore as leader.

Mandate

"You asked will we stay in Government? The answer to that is Yes," Ms Burton said.

"Before the last election, Labour asked the electorate to support the Labour Party going into government. Our mandate was to go into government and recover the economy for people. We have fallen short of some of the things we had hoped to do," she added.

Flanked by three TDs, two senators and a number of councillors and party members, Ms Burton set out her stall for the leadership position.

Aged 65, Ms Burton rejected suggestions that she was too old for the job of Labour leader and Tanaiste.

"I'm aware that someone slightly older than me, Hillary Clinton, is talking about running for the Presidency of the United States. Now, I know being President of the United States is probably a bit easier than being leader of the Labour Party, all I can say is, I'm up for it," she joked.

Ms Burton said she had no knowledge of plans by the so-called gang-of-eight to remove Mr Gilmore as leader.